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Caliper Life Sciences to Acquire Xenogen
02/13/2006
Caliper Life Sciences, Inc. (Nasdaq: CALP), a leading provider of products
and services for drug discovery research, and Xenogen Corporation (Nasdaq:
XGEN), a maker of advanced imaging systems including instruments, biological
solutions and software designed to accelerate drug discovery and development,
today announced their definitive agreement to merge. Under the agreement,
Caliper will issue common stock and warrants, currently valued at approximately
$80 million, in exchange for all of Xenogen's equity securities outstanding at
the closing. The acquisition is a defining step in Caliper's strategic
transformation into a leading provider of tools and services that increase the
productivity and clinical relevance of life sciences research, and is expected
to accelerate Caliper's revenue growth and profitability. Caliper and Xenogen
will host a conference call to discuss the transaction today, Monday, February
13, at 9 am EST.
The integration of molecular tool technologies presents a key opportunity to
improve drug discovery research. As highlighted in the FDA Critical Path
Initiative, biomarker research and better experimentation models are essential
to improve predictability and efficiency along the critical path from laboratory
to commercial drug. The combination of Caliper's proprietary microfluidic
technology and automation expertise with Xenogen's proprietary imaging
technology addresses these key research needs by creating molecular level
solutions that encompass in vitro (test tube) to in vivo (living organism)
research. These technologies offer exceptional data quality and productivity
advantages, and combining them to offer a highly correlated suite of products
and services should result in earlier, clinically relevant insights in the drug
discovery process.
"This transaction is a transformational event for Caliper," said Kevin
Hrusovsky, president and CEO of Caliper. "The acquisitions of Zymark and
NovaScreen, organic growth of Caliper's LabChip products, and the financial
turnaround of our company have set the stage for the merger with Xenogen. We are
achieving our goal of building a unique company with first-mover advantage in
bridging in vitro and in vivo experimentation. Our strategy is being fulfilled,
and with Xenogen's talented employees and remarkable technology, I am confident
that we can create enhanced value for both Caliper and Xenogen stockholders."
David Carter, CEO of Xenogen added, "We believe that this merger leverages
Xenogen's opportunity for the benefit of our customers, employees and
stockholders. The combined company can deliver Xenogen's technology to more
customers more efficiently. In the near future the development of sophisticated
molecular level products aimed at providing new solutions for our customers will
be enhanced by the combination of microfluidics and optical imaging. Our two
companies share a common vision for leading innovative pre-clinical drug
discovery."
The transaction is expected to be accretive in 2006 and 2007, as measured by
EBITDA per share (earnings before interest, taxes, depreciation, amortization
and restructuring charges), and the transaction is also expected to be EPS
accretive in 2008. The combination is expected to improve Caliper's profit
trajectory based on the following:
- Revenue growth. Xenogen has had one of the highest reported organic
growth rates of public companies in the life sciences industry in the last two
years. Xenogen's reported revenue grew from $20.1 million in 2003 to $30.8
million in 2004. As previously reported through September 30, 2005, Xenogen's
revenue was $27.7 million versus $21.2 million during the first nine months of
2004, representing revenue growth of approximately 30 percent. Caliper expects
Xenogen's revenue contribution will both expand its revenue base and boost its
annual sales growth from mid-to-high single digits into a range of ten to
fifteen percent.
- Cost efficiencies. Caliper has identified over $10 million in
potential annual cost savings through consolidation of infrastructure with
Xenogen. These cost savings are expected to result primarily from the
elimination of duplicate public company costs, redundant G&A positions and
facilities costs.
- Cash flow effects. Caliper believes that the available cash
resources of the combined companies will be sufficient to accomplish the
integration and to fund the operations of the combined businesses through
2006. Caliper expects to be cash flow positive from operations beginning in
2007.
Under the terms of the agreement, in exchange for Xenogen's outstanding
common shares and warrants to purchase common shares, Caliper will issue
approximately 13.2 million common shares and approximately 5.125 million
warrants to purchase Caliper common shares. These warrants will have a term of
five years from the closing and an exercise price of $6.79 per share. The final
exchange ratios for the issuance of Caliper common shares and warrants will be
based on the capitalization of Xenogen at the closing of the proposed
transaction. Based on Xenogen's current capitalization and certain assumptions
regarding the exercise of Xenogen stock options in the period prior to the
closing, each holder of a Xenogen common share would receive approximately 0.575
of a share of Caliper common stock and 0.223 of a warrant to acquire one Caliper
common share. Upon the timely exercise of their warrants, Xenogen warrant
holders will be entitled to receive the same number of Caliper common shares and
warrants as Xenogen's stockholders.
Immediately following the closing, Xenogen stockholders will own
approximately 26% of Caliper's outstanding common stock. Assuming the exercise
of the outstanding Xenogen warrants and after giving effect to the exercise of
the warrants issued by Caliper to the Xenogen equity holders, Xenogen
stockholders would own approximately 32% of the combined company on a fully
diluted basis. The transaction is subject to the approval of both Caliper and
Xenogen stockholders, as well as standard regulatory approvals, and is expected
to close in the second quarter of 2006.
Caliper and Xenogen will host a conference call to discuss the transaction
today, Monday, February 13, at 9 am EST. To participate in the call, please dial
866.383.8008 five to ten minutes prior to the call and use the participant
passcode of 12973890. International callers can access the call by dialing
617.597.5341 and using the same passcode.
A webcast of the proceedings is available at http://www.fulldisclosure.com.
Webcast and telephone replays of the conference call will
be available approximately two hours after the completion of the call. To access
a recording of the proceedings from February 13 through February 20, dial
888-286-8010 and use the participant passcode of 37740303. International callers
can access the playback by dialing 617.801.6888 and using the same participant
passcode.
About Caliper Life Sciences
Caliper Life Sciences is a leading
provider of drug discovery solutions for the pharmaceutical and biotechnology
industries. Caliper's mission is to transform drug discovery and diagnostics by
offering the industry's most comprehensive array of products of services for
clinically relevant experimentation. Based in Hopkinton, Massachusetts, Caliper
services approximately 80 percent of the world's leading pharmaceutical
companies through representation in thirty countries. More information about
Caliper and its products and services can be found on the web at www.caliperLS.com.
About Xenogen Corporation
Xenogen Corporation is a leading
biotechnology company offering an integrated suite of biophotonic real-time in
vivo imaging and genetic modification technologies that can help expedite drug
discovery and development, and significantly reduce the cost and time to market
for new therapies. Xenogen's VivoVision Systems non-invasively
illuminate and monitor biological processes within living mammals, at the
molecular level, in real time. The technology is designed to provide higher
quality in vivo data earlier in the drug discovery and development process.
VivoVision Solutions are designed to improve
discovery and pre-clinical research in multiple therapeutic areas. VivoVision
Biosciences represents more than 15 years of experience in the creation and characterization
of animal models, including genetic modifications, comprehensive phenotyping,
compound profiling and custom design and production of light producing cells,
microorganisms and animals. www.xenogen.com
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